Blue-Chip ETFs Hold Up During Massive Selloff in Tech Shares

As the brutal technology rout deepens, exchange-traded fund investors are placing bets on value.

BlackRock Inc.’s iShares MSCI USA Value Factor ETF (VLUE) had its best week of inflows on record, according to data compiled by Bloomberg. The fund has blue chips such as AT&T Inc., International Business Machines Corp. and Citigroup Inc. among its biggest holdings. Meanwhile, the $37 billion iShares Russell 1000 Value ETF (IWD) took in the most cash since March last week.

With the Nasdaq extending its selloff into a third day, value stocks are holding up better than broader benchmarks. After the category had its worst quarter this century in the wake of the coronavirus pandemic, some traders are betting on a potential recovery.

“While I certainly get that their revenues and earnings growth projections are in jeopardy, the price can only go down so much before it looks like a great value,” said Don Calcagni, chief investment officer of Mercer Advisors. “Especially as we start to come out of Covid and the economy grows again, I think you’ll start to see those value stocks pivot quite nicely.”